C R U C I A L

Climate Risk and Uncertainty Collective Intelligence Aggregation Laboratory

CRUCIAL’s mission is to deliver calibrated, high-quality climate-risk forecasts.

We employ expert prediction markets – hosted on the AGORA prediction-market platform – to elicit, aggregate, and summarise knowledge on future climate risks, drawing on expertise from diverse areas of physical, social, and policy science.

27.11.2024: We are pleased to announce and acknowledge financial support from the SCOR Corporate Foundation for Science.

Climate-risk information provision faces severe challenges

Bad Incentives

The Climate Service Provider (CSP) industry is growing rapidly to meet demand. In this drive to meet growing demand, a number of issues rooted in adverse incentives have been overlooked.

Data gaps

Data gaps are particularly substantial and pressing for forward-looking risk information. And where forward-looking information exists, it is largely based on (i) announced intentions, or (ii) scenarios for which relative likelihood information currently does not exist.

Circularity problem

Unconditional forecasts of global temperature alone have an ambiguous interpretation. Suppose a forecast portends a small global temperature anomaly. Are future temperatures low because CO2 emissions will be tamed aggressively, or because climate turns out to be much less sensitive to atmospheric CO2 concentrations than currently believed?

Abundance of Choice

Complex statistical analysis and mathematical modelling involve multitudes of choices and assumptions. Recent “many analysts, one data set” studies show the danger of relying solely on one research team. Here we present several examples from this literature.

Multi-disciplinary problem

Top emitters have a large influence on the annual rate of GHG emissions. To develop an understanding of the anthropogenic contribution to future CO2 concentrations, there is a need for country specialists in the politics, energy policies, environmental regulations, and economics of each substantial emitter.

AGORA prediction market platform

AGORA is a platform for hosting sophisticated prediction markets that can aggregate the output of quantitative predictive models alongside more tacit forms of expert knowledge. AGORA was originally created by the investment manager Winton Group before being further developed by its technology spinout, Hivemind.

AGORA supports markets that generate high-resolution joint probability distributions from the trading activity of participants, who can use the AGORA UI or trade programmatically using an API.

AGORA has been tested over the past three years and used to run prediction markets with expert participants for forecasting seasonal temperatures and rainfall, Atlantic hurricane activity, and El Niño events. Hivemind transferred the IP for AGORA to Lancaster University in 2022 for use in CRUCIAL.

Figure: The evolution of prices in a joint-outcome market for UK monthly temperature and rainfall for June 2018. The participants were 24 teams from British universities. Winton Group sponsored the real-money incentive pot (£55,000). The black dots show the values of temperature and rainfall for previous Junes and the blue cross shows the actual value for June 2018.

Markets

CRUCIAL’s inaugural market concluded successfully

The CRUCIAL Atlantic Hurricane Market 2024

Organisation

Core, Collaborators, Governance

Core Team

Brett Day

University of Exeter

Professor of Environmental Economics

David Baynard

Fore Stun Ltd.

CRUCIAL Engineering Director

Kim Kaivanto

Lancaster University

Director of CRUCIAL

Mark Roulston

Lancaster University

CRUCIAL Operations Director

Todd Kaplan

University of Exeter

Professor of Economics

Collaborating Groups

Atmospheric G2

Team Lead Dr. Todd Crawford

Cardiff SEES

School of Earth and Environmental Sciences

Team Lead Dr. David MacLeod

Imperial College

Team Lead Prof. Ralf Toumi

Newcastle CCER

Centre for Climate and Environmental Resilience

Team Lead Prof. Hayley Fowler

Oxford AOPP

Atmospheric, Oceanic, and Planetary Physics

Team Lead Dr. Kristian Strommen

UoBristol

Team Lead Dr. Laurence Hawker

UoExeter

Team Lead Dr. Stefan Siegert

UoGlasgow

Team Lead Prof. Jethro Browell

UoReading

Team Lead Dr. Xiangbo Feng

Governance

Scientific Advisory Committee

User Steering Group

Papers & Publications

Mark Roulston, Kim Kaivanto

August 2024 PLOS ONE 19(8): e0309164 Prediction markets

Joint-Outcome Prediction Markets for Climate Risks

This paper reports viability tests of prediction markets with highly granular, monthly UK rainfall and temperature joint outcome spaces. The experiments demonstrate these markets can aggregate the judgments of experts with relevant expertise, and suggest similarly structured markets, with longer horizons, could provide a mechanism to produce credible forecasts of climate-related risks for policy making, planning, and risk disclosure.

PDF Dataset DOI

Mark Roulston, Kim Kaivanto

August 2024 Bulletin of the American Meteorological Society 105(10): E1898–E1914 Prediction markets

Can expert prediction markets forecast climate-related risks?

This article examines the performance of 24 prediction markets for climate-related variables that have been run over the past five years. The markets had horizons of 2 to 12 months. The predictions of the markets were consistent with good reliability, given the resolving power afforded by the sample size.

PDF Dataset DOI

Mark Roulston, Todd Kaplan, Brett Day, Kim Kaivanto

September 2022 Nature Climate Change 12(10): 879-880 CO2, Prediction markets

Prediction-market innovations can improve climate-risk forecasts

Forward-looking information about climate risks is critical for decision makers, but the provision and accuracy of such information is limited. Innovative prediction-market designs could provide a mechanism to enhance applied climate research in an incentive-compatible way.

PDF DOI

Mark Roulston, Todd Kaplan, Brett Day, Kim Kaivanto

July 2022 CO2, Prediction markets

CRUCIAL White Paper

A proposal for generating forward-looking climate-risk information with expert prediction markets.

PDF

Kim Kaivanto

January 2022 Prediction markets

Select bibliography of prediction market literature

A collection of articles on prediction markets.

Posts

AGORA Trading Guide v1.0

Guide to using CRUCIAL’s AGORA prediction market platform

Mark Roulston

Apr 11, 2025 2 min read

PDF

The challenge of the horizon: Multi-decade prediction markets for climate

What problems do multi-decadal horizons create, and how can they be addressed?

Mark Roulston

Mar 17, 2025 4 min read

Experts from UK universities strengthen LUMS’ climate risk forecasting initiative

Teams of academic experts from seven UK universities have joined Lancaster University Management School’s CRUCIAL initiative.

Lancaster University Press Team

Feb 28, 2025 3 min read

Media coverage roundup

Media pieces mentioning CRUCIAL from the last two weeks.

Kim Kaivanto

Feb 7, 2025 1 min read

Asset owners focus on climate adaptation as heat rises

Donald Trump’s return to the White House highlights the need for asset owners to factor in climate adaptation, as well as mitigation.

Thomas Helm

Jan 23, 2025 1 min read

See all posts

Talks and events

Expert Prediction Markets for Climate Risks

In this talk, Mark Roulston discusses how LMSR Automated Market Maker prediction markets can solve key challenges of climate risk forecasting.

Slides

Manipulation and (Mis)Trust in Prediction Markets

In this talk, Todd Kaplan (UoExeter, UoHaifa, CRUCIAL) presents joint work with Lawrence Choo and Ro’i Zultan on the effect that the presence of manipulators has on trust in prediction markets.

PDF Slides

Joint-Outcome Expert Information Markets for Climate Risks: Conditional Forecasting with the LMSR

Kim Kaivanto on the properties and potential of CRUCIAL’s LMSR platform at the EFAG Second Summer Symposium for Sustainability hosted by Durham University.

Slides

Joint-Outcome Expert Prediction Markets for Climate Risks: Conditional Forecasting with the LMSR

Kim Kaivanto on the properties and potential of CRUCIAL’s LMSR platform at the inaugural Experimental Sustainable Finance symposium hosted by Radboud University.

Slides

Expert Prediction Markets for Climate Risks

In this talk, Mark discusses prediction markets for forecasting climate risk, CRUCIAL and its AGORA platform, and the soon-to-open Crucial Atlantic Hurricane Market 2024 (CAHM24).

Video

Markets, Information, and Feedback

In this talk, Todd Kaplan (UoExeter, UoHaifa, CRUCIAL) discusses potential feedback effects in equity markets and prediction markets.

Expert Prediction Markets for Climate Risk

Dr Kim Kaivanto and Dr Mark Roulston introduce CRUCIAL at the Pentland Centre.

A viability study of joint-outcome prediction markets for climate risk

We demonstrate the viability of highly granular, two-dimensional (joint) outcome spaces with markets for monthly UK rainfall and temperature.

Two projects on learning from markets: bank runs and climate change predictions

We use a lab experiment to study the endogeneity between stock market prices and bank runs. We also propose how prediction markets can be used to provide climate change predictions.

Prediction Markets for Climate Risk

A workshop about an initiative to address emerging problems with the provision of climate risk information. 8 Feb 2022, Woburn House, London

Partners

CRUCIAL is supported by the SCOR Corporate Foundation for Science.

The AGORA platform was developed by the Winton Group.

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